Ascension and Providence St. Joseph, two nonprofit healthcare companies, are in talks to create the nation's largest owner of hospitals. If the merger in fact occurs, this deal would create the largest U.S. owner of hospitals, with 191 hospitals in 27 states and annual revenue of $44.8 billion. This would also place the current largest hospital operator, HCA, in second place. This merger would also surpass another large hospital merger between Dignity Health and Catholic Health Initiatives, which together would own 139 hospitals and have a combined revenue of $28.4 billion. The financial terms of the deal have not been worked out yet as this is a particularly interesting case. A combination of nonprofit hospitals does not typically involve one buying the other.
Currently, the United States spends about one-third of the nation's annual $3.3 trillion healthcare bill on hospitals. This merger could quite possibly help reduce some of this unnecessary spending. However, many critics have expressed concerns that this could also raise prices and limit patient choices. This merger is consistent with a current trend of mega-mergers in health care, such as CVS Health's
However, there is a big chance that this deal will in fact not occur because lately merger talks have been put on halt. Providence has been mostly focusing on improving its financial situation and increasing its investment in digital and retail health care, while Ascension is working on a new strategy to boost growth and labor productivity. Because of this, the timing of the merger might not be the best. Additionally, Providence Health & Services and St. Joseph Health System merged in 2016 and they suffered an operating loss that year of $225 million. The health-care industry is currently experiencing a major shake-up and it will be very interesting to see where this merger goes.
